Jurisdiction - Hong Kong
Hong Kong – Regulatory Watch.

19 Juy, 2012

Additions to the Takeovers Code Post-vet List
In June 2012, Rule 3.8 announcements were added to the Post-Vet List, in view of the factual and straight-forward nature of information routinely required to be disclosed under the rule. The Takeovers Code Post-Vet List sets out the types of routine announcements that will not be subject to the SFC’s prior comment under Rule 12.1.
When an offer period begins, Rule 3.8 requires an offeree company to announce, as soon as possible, details of all classes of relevant securities issued by it, together with the number of such securities in issue. An offeror or a potential named offeror also must announce the same details of its relevant securities unless it is stated that the offer is likely to be solely in cash. Rule 3.8 further requires that if any previously announced information changes during an offer period, a revised announcement must be made as soon as possible.
The revised Post-Vet List now contains the following types of announcements: 
  • announcements of the appointment of independent financial advisers under Rule 2.1; 
  • announcements of the dispatch of circulars under Rule 8 or Rule 25; 
  • announcements of delay in the dispatch of circulars under Rule 8.2 or Rule 8.4; 
  • announcements of the appointment and resignation of directors of the offeree company under Rule 26.4 and Rule 7; 
  • announcements of placing and top-up transactions under Note 6 on dispensations from Rule 26; and 
  • announcements of numbers of relevant securities in issue under Rule 3.8.
Parties and their advisers must consult the SFC at the earliest opportunity if there is any doubt as to whether an announcement qualifies for post-vetting.
Short Position Reporting Rules
The Securities and Futures (Short Position Reporting) Rules came into effect on June 18, 2012, except for publication of the aggregated short positions data under Rule 6 which, subject to negative vetting, will be effective September 7, 2012. 
The SFC has published a FAQ and guidance note in relation to the short position reporting rules. Please follow the link: http://www.sfc.hk/sfc/html/EN/research/short-position-reporting/index.html.


Financial Dispute Resolution Centre

The revised version of the Code of Conduct for Persons Licensed by or Registered with the SFC took effect on June 19, 2012. The amendments were in relation to the establishment of the Financial Dispute Resolution Centre Ltd (FDRC) (website: www.fdrc.org.hk). 
The FDRC was incorporated as a limited company by guarantee to administer an independent and impartial dispute resolution scheme to resolve monetary disputes (not exceeding HK$500,000) between individuals and financial institutions through “mediation first, arbitration next”.
Summary of amendments:
  1. All licensed/registered persons automatically become and remain members of the FDRC scheme and are bound by the dispute resolution processes established by the scheme.
  2. All licensed/registered persons must seek to resolve complaints internally, and failing resolution, inform clients of their right to make a complaint to the FDRC.
  3. All licensed/registered persons must provide the SFC with details of the outcome, including the terms of settlement, if requested.
  4. All licensed/registered persons are required to make full and frank disclosure before mediators/arbitrators and to assist the FDRC process.
SFC PSI guidelines Finalized
In June 2012, the SFC published the final Guidelines on Disclosure of Inside Information. The  statutory disclosure regime will become effective on January 1, 2013. 
The following sections have been newly added into the Guidelines:
  • officers’ liabilities;
  • obligations of non-executive directors (NEDs);
  • examples of reasonable measures which should be considered when establishing systems and procedures;
  • clarifications on how to deal with media speculation, market rumors and analysts’ reports; and
  • examples of relevant facts and key aspects which were viewed by tribunals as constituting “material” information in certain insider dealing cases. 
Briefly, the key elements comprising the concept of inside information are: 
  • specific information about a particular listed corporation, a shareholder/officer or its listed shares/their derivatives; 
  • the information is not generally known to those who are accustomed or would be likely to deal in the corporation’s 
  • securities; and 
  • if known, the information would be likely to have a material effect on the price of the listed securities. 
For details of how these elements are applied, please click here.
For a copy of the Final Guidelines, please click here.


For further information, please contact:
Venantius Tan, Partner, Morrison & Foerster



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